Floor Trader

Floor Trader

Floor traders are investment professionals who work at securities exchanges and attempt to profit, for their own account, by making numerous trades throughout the day. The process of making a small profit on hundreds of trades per day is called scalping.

Floor traders are generally independent traders, who work for themselves, not an investment banking firm. Traders of this type are required to add liquidity to the markets in which they trade and need to make 75% or more of their trades in the opposite direction that a particular stock is trading.

For example, if a stock has been moving up throughout a given trading day, with investors bullish on this stock, the floor trader must provide liquidity by selling shares of this particular stock.

They can sell shares from their own account or attempt to find investors willing to sell shares of the stock in question. Floor traders are also called competitive traders, registered traders, and registered competitive traders.